Call money rate ended lower on RBI intervention

Call rates were high at the start of the week due to fund outflows on account of advance tax payments, but later eased due to the RBI’s intervention. The interbank call money rate ended at 8.50% on June 20 as against 8.70-8.75% on June 13. The RBI conducted two term repo auctions for notified amounts of Rs 10,000 each during the week to ease liquidity conditions; the first two-day auction was held on June 18 and the second, of seven-day tenor, was held on June 20.

Gilt prices fell on rise in WPI inflation and the Iraq conflict

Government bond prices ended lower in a volatile week taking cues from various domestic and international developments. The yield of the benchmark 8.83% 2023 paper rose to 8.72% on June 20 from 8.60% on June 13. Gilts began the week on a dim note after data showed that domestic wholesale inflation had risen to a five-month high of 6.01% in May from 5.20% in April, dashing hopes of an interest rate cut by the RBI. Fall in bond prices was aggravated due to increasing conflict in Iraq, which dampened global risk appetite and caused crude oil prices to rise amid supply concerns. The rise in crude oil prices has, in turn, triggered concerns that inflation may rise further in India as the country is a major importer of crude oil. Intermittent value buying during the week and strong demand at the weekly auction limited gilt losses.

ZCYC curve shifted upwards

ZCYC curveshifted upwards and was flatter with higher yields for papers at the short end, but with lower yields for papers at the long end of the curve.

Source: NSE

AAA Corporate Bond Yields and Spread

Yield

Spread

18-Jun

11-Jun

18-Jun

11-Jun

1 year

8.89

8.67

0.43

0.29

3 year

9.04

9.06

0.50

0.58

5 year

9.14

9.12

0.46

0.53

10 year

9.10

9.06

0.25

0.25

Data with two day lag

Government Borrowing Programme (Rs. Cr.)

Budgeted G-Sec Gross Borrowings for 2013-14

597000

Budgeted G-Sec Net Borrowings for 2012-13

457000

Budgeted Redemptions

140000

G-Sec Gross Borrowings till Date

183000

G-Sec Gross Borrowing Completed (%)

30.65%

Maturities till date

75113

Net G-Sec Borrowings till date

107887

364 Day T-Bill Gross Borrowings till date

36000

OMO Purchases till date

0

SDL auction till date

37766

Term of the week

Foreign Currency Convertible bond – These coupon payingbonds are issued by corporate entities to raise money in a foreign currency. Buyers can redeem the bonds or convert them into equity at maturity. The payment of the principal is usually in the currency in which the money is raised.

Call money rate ended lower on RBI intervention

Call rates were high at the start of the week due to fund outflows on account of advance tax payments, but later eased due to the RBI’s intervention. The interbank call money rate ended at 8.50% on June 20 as against 8.70-8.75% on June 13. The RBI conducted two term repo auctions for notified amounts of Rs 10,000 each during the week to ease liquidity conditions; the first two-day auction was held on June 18 and the second, of seven-day tenor, was held on June 20.

Gilt prices fell on rise in WPI inflation and the Iraq conflict

Government bond prices ended lower in a volatile week taking cues from various domestic and international developments. The yield of the benchmark 8.83% 2023 paper rose to 8.72% on June 20 from 8.60% on June 13. Gilts began the week on a dim note after data showed that domestic wholesale inflation had risen to a five-month high of 6.01% in May from 5.20% in April, dashing hopes of an interest rate cut by the RBI. Fall in bond prices was aggravated due to increasing conflict in Iraq, which dampened global risk appetite and caused crude oil prices to rise amid supply concerns. The rise in crude oil prices has, in turn, triggered concerns that inflation may rise further in India as the country is a major importer of crude oil. Intermittent value buying during the week and strong demand at the weekly auction limited gilt losses.

ZCYC curve shifted upwards

ZCYC curveshifted upwards and was flatter with higher yields for papers at the short end, but with lower yields for papers at the long end of the curve.

Source: NSE

AAA Corporate Bond Yields and Spread

Yield

Spread

18-Jun

11-Jun

18-Jun

11-Jun

1 year

8.89

8.67

0.43

0.29

3 year

9.04

9.06

0.50

0.58

5 year

9.14

9.12

0.46

0.53

10 year

9.10

9.06

0.25

0.25

Data with two day lag

Government Borrowing Programme (Rs. Cr.)

Budgeted G-Sec Gross Borrowings for 2013-14

597000

Budgeted G-Sec Net Borrowings for 2012-13

457000

Budgeted Redemptions

140000

G-Sec Gross Borrowings till Date

183000

G-Sec Gross Borrowing Completed (%)

30.65%

Maturities till date

75113

Net G-Sec Borrowings till date

107887

364 Day T-Bill Gross Borrowings till date

36000

OMO Purchases till date

0

SDL auction till date

37766

Term of the week

Foreign Currency Convertible bond – These coupon payingbonds are issued by corporate entities to raise money in a foreign currency. Buyers can redeem the bonds or convert them into equity at maturity. The payment of the principal is usually in the currency in which the money is raised.